Editor’s note: Definitions are written for U.S. consumers and may vary by state, utility, or electricity provider.
Electricity & Utility
Access Charge
A fixed fee on your electricity bill that helps pay for maintaining power lines, meters, and other utility infrastructure. This charge typically does not change based on how much electricity you use.
Ancillary Services
Support services required to keep the electric grid stable and reliable, such as frequency control and voltage support.
Average Residential Rate
An estimated average price per kilowatt-hour (kWh) paid by residential customers, often reported by government agencies. Individual bills may differ.
Balance Forward
An unpaid amount from a previous billing period that is carried over to your current electricity bill.
Base Load
The minimum amount of electricity demand required at all times to keep the grid operating.
Billing Cycle
The period of time between electricity bills, typically about one month.
Budget Billing
A billing option that spreads estimated annual electricity costs evenly across the year to help reduce seasonal bill fluctuations.
Capacity
The maximum amount of electricity a power plant or system can produce at a given time.
Demand
The rate at which electricity is being used at a specific moment, usually measured in kilowatts (kW).
Demand Charge
A fee on some electricity bills based on the highest level of electricity demand reached during a billing period.
Electric Grid
The interconnected network of power plants, transmission lines, distribution systems, and equipment used to deliver electricity.
Electric Utility
A company responsible for delivering electricity, maintaining infrastructure, and responding to outages.
Energy Charge
The portion of your electricity bill based on the amount of electricity you use, typically measured in kilowatt-hours (kWh).
Estimated Bill
A bill based on estimated electricity usage when an actual meter reading is unavailable.
Fixed Rate Plan
An electricity pricing plan where the supply rate stays the same for the length of the contract, regardless of market changes.
Generation
The process of producing electricity from energy sources such as natural gas, wind, solar, or nuclear power.
Generation Charge
The cost associated with producing electricity, often listed separately on electricity bills in deregulated states.
Kilowatt (kW)
A unit of power that measures the rate at which electricity is being used.
Kilowatt-hour (kWh)
A unit of energy that measures how much electricity is used over time. Most residential electricity bills are based on kWh usage.
Load
The amount of electricity being used by customers at a given time.
Local Distribution Company (LDC)
The utility responsible for delivering electricity to homes and businesses within a specific service area.
Market Rate
An electricity price that can change based on supply and demand conditions in the energy market.
Meter
A device that measures how much electricity a customer uses.
Minimum Usage Fee
A charge applied if electricity usage falls below a certain threshold during a billing period.
Outage
A temporary loss of electric service.
Peak Demand
The highest level of electricity use during a specific period.
Rate Schedule
A document outlining how electricity charges are calculated, including rates, fees, and billing conditions.
Service Address
The physical location where electricity is delivered and metered.
Smart Meter
A digital electricity meter that records usage in intervals and can communicate data to the utility.
Time-of-Use (TOU) Rate
An electricity pricing structure where rates vary depending on the time of day electricity is used.
Transmission
The movement of electricity over long distances using high-voltage power lines.
Usage History
A record of past electricity consumption, often shown on bills or utility portals.
Variable Rate Plan
An electricity pricing plan where the supply rate can change from month to month based on market conditions.
Solar Energy
Buyback Rate
The price a utility or supplier pays for excess electricity generated by a customer, such as from rooftop solar.
Interconnection
The process of safely connecting a solar or other distributed energy system to the electric grid.
Inverter
A device that converts electricity generated by solar panels into usable alternating current (AC) power.
Net Metering
A billing arrangement that credits customers with solar panels or other generation for excess electricity sent back to the grid. Net metering rules vary by state and utility.
Net Excess Generation
Electricity produced by a customer-owned system that exceeds on-site usage and is exported to the grid.
Panel Efficiency
A measure of how effectively a solar panel converts sunlight into electricity.
Power Purchase Agreement (PPA)
A contract for buying electricity from a specific generator, often used in residential or commercial solar projects.
Solar Photovoltaic (PV)
A technology that converts sunlight directly into electricity using solar panels.
Solar Production
The amount of electricity generated by a solar energy system.
System Size
The rated capacity of a solar or energy system, usually measured in kilowatts (kW).
True-Up
A billing adjustment that reconciles estimated or net-metered usage with actual electricity consumption over a set period.
Renewable & Clean Energy
Clean Energy
Electricity generated from sources that produce little to no air pollution, such as wind, solar, hydropower, or nuclear energy.
Green Energy
Electricity generated from renewable or environmentally preferred sources. Definitions may vary by provider or program.
Hydropower
Electricity generated by using flowing or falling water to turn turbines.
Nuclear Energy
Electricity generated using heat produced from nuclear reactions.
Renewable Energy
Energy generated from sources that naturally replenish, such as wind, solar, and hydropower.
Renewable Energy Credit (REC)
A certificate representing the environmental attributes of one megawatt-hour (MWh) of renewable electricity generation.
Performance-Based Incentive
A payment or credit based on the amount of electricity a renewable energy system produces over time.
Zero-Emission Energy
Electricity generated without releasing greenhouse gases during production, such as wind, solar, or nuclear power.
Energy Markets & Regulation
Competitive Electricity Market
A system where customers can choose their electricity supplier instead of buying supply from a single regulated utility. Competitive markets operate in select states, including
Texas,
Pennsylvania,
Ohio, and
Illinois.
Deregulation
A market structure that allows competition among electricity suppliers while utilities continue to deliver power. Deregulated electricity markets are state-specific.
Independent System Operator (ISO)
An organization that manages the operation of the electric grid and wholesale electricity markets in certain regions.
Qualified Renewable Energy Source
An energy source that meets eligibility requirements under a specific renewable energy or incentive program.
Retail Electric Provider (REP)
A company that sells electricity supply to customers in deregulated states, while the local utility continues to deliver the power.
Supplier
A company that generates or purchases electricity and sells it to customers in competitive markets.
Utility Territory
The geographic area where a specific electric utility is responsible for delivering electricity.
Wholesale Electricity Market
A marketplace where electricity generators sell power to utilities and suppliers before it reaches consumers.
This glossary is for educational purposes only. Definitions are simplified and may vary by state, utility, electricity provider, or regulatory authority.